Simple Q&A - NISA

[zeroshiki]

I'm completely new to investing so I have a few (very basic) questions before I decide which broker and which type of NISA account I want to sign up with:

What is the difference between a "normal trading account" and a NISA account?

I keep reading that after the 5 or 20 years tax-free period is over there is an option to move it into a normal trading account but I'm not completely sure what one is.

Also, is it possible to transfer between an ordinary NISA account and a Tsumitate NISA account?

I'm planning on starting off with a Tsumitate NISA account and then transfering to an ordinary NISA account in the future as I'd like to choose my own stocks and ETFs. I realise I cannot hold both at the same time but is this still the case if they are with with different brokers ie one with Rakuten and another with SBI?

1. A normal account is just that, normal. You can buy whatever securities you want and it gets taxed on capital gains (20%-ish in Japan). NISA is, as you probably know, a tax-free account with a yearly maximum of 1.2M for regular NISA and 400k for Tsumitate NISA. The securities you can purchase with them are limited (especially with Tsumitate NISA, its all mutual funds). Do note that people here also refers to normal account as specific/designated which means that your securities company (Rakuten/SBI/Monex) are the ones who withhold the 20% cap gains tax for you. A true normal account means you have to file taxes yourself (I don't recommend this from a hassle perspective)

2. So what the 5 year (NISA) and 20 year (T-NISA) periods mean is that after that period, whatever the value of your securities are, they are not taxed on capital gains if you sell (so you have a 20% advantage on them). If you don't sell and move the securities to a normal/designated account, it converts your acquisition cost to be whatever that value is as if you just bought it. For example, you buy stock A at 200 yen in a NISA account, after 5 years, its value is 300. You have a gain of 100 yen tax free instead of the 80 you would get in a designated account.
Now if you transfer this to a designated account after the 5 year and then wait another year and it goes up to 350, your capital gains for tax purposes is only 50 yen since your designated account considers your acquisition cost to be 300.

3. I don't see why its not possible to do a TNISA->NISA transfer but I don't think anyone here has attempted to do so.

4. NISA accounts are managed by the government so you can't have more than one no matter how many securities accounts you own.

[thejunman]

1. A normal account is just that, normal. You can buy whatever securities you want and it gets taxed on capital gains (20%-ish in Japan). NISA is, as you probably know, a tax-free account with a yearly maximum of 1.2M for regular NISA and 400k for Tsumitate NISA. The securities you can purchase with them are limited (especially with Tsumitate NISA, its all mutual funds). Do note that people here also refers to normal account as specific/designated which means that your securities company (Rakuten/SBI/Monex) are the ones who withhold the 20% cap gains tax for you. A true normal account means you have to file taxes yourself (I don't recommend this from a hassle perspective)

2. So what the 5 year (NISA) and 20 year (T-NISA) periods mean is that after that period, whatever the value of your securities are, they are not taxed on capital gains if you sell (so you have a 20% advantage on them). If you don't sell and move the securities to a normal/designated account, it converts your acquisition cost to be whatever that value is as if you just bought it. For example, you buy stock A at 200 yen in a NISA account, after 5 years, its value is 300. You have a gain of 100 yen tax free instead of the 80 you would get in a designated account.
Now if you transfer this to a designated account after the 5 year and then wait another year and it goes up to 350, your capital gains for tax purposes is only 50 yen since your designated account considers your acquisition cost to be 300.

3. I don't see why its not possible to do a TNISA->NISA transfer but I don't think anyone here has attempted to do so.

4. NISA accounts are managed by the government so you can't have more than one no matter how many securities accounts you own.

So it's basically just your regular bank account that you use everyday and take money out of everyday? I've seen a few different names for it so it's confused me a little. If I transfer the money to my regular bank account within the 5 or 20 year period, would that be still be tax free? I don't know if I'll stay in Japan forever so I'd like to be able to take it out anytime without losing too much money.

My plan is to start off with just mutual funds then later maybe delve into other securities like individual stocks and shares, and possibly bonds. Would the regular NISA account be better in this case? I wouldn't be able to use a Tsumitate NISA and use another brokeage account for other securities, right?

[zeroshiki]

So it's basically just your regular bank account that you use everyday and take money out of everyday? I've seen a few different names for it so it's confused me a little. If I transfer the money to my regular bank account within the 5 or 20 year period, would that be still be tax free? I don't know if I'll stay in Japan forever so I'd like to be able to take it out anytime without losing too much money.

My plan is to start off with just mutual funds then later maybe delve into other securities like individual stocks and shares, and possibly bonds. Would the regular NISA account be better in this case? I wouldn't be able to use a Tsumitate NISA and use another brokeage account for other securities, right?

1. No, its not a bank account. Its a securities account. You will need to add money to it through your bank account though. NISA is only valid for securities (stocks or mutual funds in this case). You need to use money you put into your securities account from your bank account to purchase the securities. Its the securities that are exempted from capital gains tax (there's no capital gains from just money).

If you leave Japan, the easiest thing to do is to sell off your securities into money and then bring that back to your home country.

2. Tsumitate NISA can only purchase mutual funds so if you want stocks then you'd need to use regular NISA.

I think you might be getting terms confused here. You can have 1 account for Rakuten, for example, and then have a designated account and a NISA account inside it. You don't need to have separate accounts with different securities companies just to use NISA.

As for your question, the recommendation is always to just stay with T-NISA unless you can use up the NISA limit of 1.2M since the T-NISA period is 20 years. You can choose to have either a NISA or T-NISA account every year so you shouldn't really be worried about your choice. Choose what makes sense for you NOW.

You can have a NISA or T-NISA but you cannot have both.

[thejunman]

1. No, its not a bank account. Its a securities account. You will need to add money to it through your bank account though. NISA is only valid for securities (stocks or mutual funds in this case). You need to use money you put into your securities account from your bank account to purchase the securities. Its the securities that are exempted from capital gains tax (there's no capital gains from just money).

If you leave Japan, the easiest thing to do is to sell off your securities into money and then bring that back to your home country.

2. Tsumitate NISA can only purchase mutual funds so if you want stocks then you'd need to use regular NISA.

I think you might be getting terms confused here. You can have 1 account for Rakuten, for example, and then have a designated account and a NISA account inside it. You don't need to have separate accounts with different securities companies just to use NISA.

As for your question, the recommendation is always to just stay with T-NISA unless you can use up the NISA limit of 1.2M since the T-NISA period is 20 years. You can choose to have either a NISA or T-NISA account every year so you shouldn't really be worried about your choice. Choose what makes sense for you NOW.

You can have a NISA or T-NISA but you cannot have both.

Okay, thanks for the confirmation.

I'm completely new to investing so it's always good to learn.

[John_conner]

Hi

So I've decided to do the Nisa tsu, I have a Rakuten sec account and am going to apply for a NISA tsu through there.

I just got knocked back for a second time for a Rakuten bank account even through I’ve had a cc with them for a few years. I've heard that it could be as simple as a middle name issue etc.

I’ve decided I’ll just you my JP post account to fund the NISA, my question is about the names on my Rakuten sec account, and my Japan post account. Do they have to be exactly the same?

Many thanks for all your help guys

[zeroshiki]

Hi

So I've decided to do the Nisa tsu, I have a Rakuten sec account and am going to apply for a NISA tsu through there.

I just got knocked back for a second time for a Rakuten bank account even through I’ve had a cc with them for a few years. I've heard that it could be as simple as a middle name issue etc.

I’ve decided I’ll just you my JP post account to fund the NISA, my question is about the names on my Rakuten sec account, and my Japan post account. Do they have to be exactly the same?

Many thanks for all your help guys

Did Rakuten Bank tell you why they rejected your application? They usually will.

And the answer is that yes the name on your bank account and Rakuten securities account needs to match. With alot of the banking restrictions nowadays, most financial institutions require you to have the same name as your MyNumber card anyways so hopefully yours matches up.

To use Rakuten with Yucho, there's a guide here: https://www.rakuten-sec.co.jp/web/servi ... pbank.html

[John_conner]

Hi

So I've decided to do the Nisa tsu, I have a Rakuten sec account and am going to apply for a NISA tsu through there.

I just got knocked back for a second time for a Rakuten bank account even through I’ve had a cc with them for a few years. I've heard that it could be as simple as a middle name issue etc.

I’ve decided I’ll just you my JP post account to fund the NISA, my question is about the names on my Rakuten sec account, and my Japan post account. Do they have to be exactly the same?

Many thanks for all your help guys

Did Rakuten Bank tell you why they rejected your application? They usually will.

And the answer is that yes the name on your bank account and Rakuten securities account needs to match. With alot of the banking restrictions nowadays, most financial institutions require you to have the same name as your MyNumber card anyways so hopefully yours matches up.

To use Rakuten with Yucho, there's a guide here: https://www.rakuten-sec.co.jp/web/servi ... pbank.html

They didn’t give a reason in the email. I’ll have to double check. I’ll have to check all my names and see if they match. I wonder if I can change some if they don’t.

Many thanks

[alberto]

What happens if you try to invest over the yearly limit of NISA? Thank you!

[RetireJapan]

What happens if you try to invest over the yearly limit of NISA? Thank you!

Very simple -the order won't go through.

[alberto]

Thanks! Good to know.